I can not comprehend why options are considered to be more risky then futures ?In my opinion it`s just the opposite. Simple buying call or put is much better of buying or selling any underlying by the reason of pre limited loss. And moreover you can be still in the market with an option having good chances for profit while taking losses few times in a row with futures. I have an expirience wth futures but no consistent profits despite on good predictions of market movements. All imo
day trading by options wth 5k
- Thread starter AK(m)
- Start date
Trading options can be risky with small accounts because the temptation is to buy options that are cheap - out of the money or with little time value left- and these can go down in price even if the underlying goes in the desired direction.
How to work around the PDT rule with options:
- part of the rule is that the 4 daytrades over a 5-day period must comprise more than 6% of your trading during that time in order to trigger the PDT restrictions. Some brokers follow this part of the rule, some don't.
- instead of closing a position that will then count as a daytrade, lock in your gains by opening an opposing position in another strike, creating either a vertical spread or a calendar spread. For example, if your $20 calls have hit your target price, sell some $21 calls. They will move at about the same rate. The following day, sell the $20 calls and buy back the $21 calls. Clearly you have to consider the extra commissions and the bid-ask spread on the $21 calls to see if it's worth doing. Some brokers will let you sell the $20 calls and buy the $21 calls as a single transaction, saving some commission and possibly getting a price that's inside the bid-ask spread.
- trade in a retirement account. You have to wait 1 day for settlement, and you can sell-to-open options only in certain circumstances, but there's no PDT to worry about.
How to work around the PDT rule with options:
- part of the rule is that the 4 daytrades over a 5-day period must comprise more than 6% of your trading during that time in order to trigger the PDT restrictions. Some brokers follow this part of the rule, some don't.
- instead of closing a position that will then count as a daytrade, lock in your gains by opening an opposing position in another strike, creating either a vertical spread or a calendar spread. For example, if your $20 calls have hit your target price, sell some $21 calls. They will move at about the same rate. The following day, sell the $20 calls and buy back the $21 calls. Clearly you have to consider the extra commissions and the bid-ask spread on the $21 calls to see if it's worth doing. Some brokers will let you sell the $20 calls and buy the $21 calls as a single transaction, saving some commission and possibly getting a price that's inside the bid-ask spread.
- trade in a retirement account. You have to wait 1 day for settlement, and you can sell-to-open options only in certain circumstances, but there's no PDT to worry about.
The acct does not need to be a retirement acct-- simply remove margin and a regular acct becomes a cash acct.
Not really.
You have implied volatility, time decay and delta and gamma differences you need to be aware of that can negatively affect your outcome. Not a wise choice.
Day trading isn't a conservative strategy. IMHO, you either need some serious precision price action trading experience, or a very large trading account, to be a consistently profitable day trader.
Since you believe you predict overall market movement well, it sounds like swing trading options makes more sense. You can trade options conservatively because of the fixed risk. If you sell premium, be sure to hedge via spread strategies.
Atticus has a lot of experience with that; listen to whatever he says
Are you kidding? Time decay and the spreads will kill you before commissions do. Daytrading them can be extremely lucrative.